Tuesday, Oct 01 2013
• 10 a.m. (ET)

The Federal Government Shuts Down

For the first time since 1996, the government has shut down. Starting today, more than 800,000 federal workers are likely to be furloughed. That includes 90 percent of the Treasury Department, nearly all of NASA and all but 1,000 employees at the EPA. The House and Senate spent Monday voting on resolutions that would temporarily fund the government. But the impasse in Washington isn’t over spending. It’s over Obamacare, which opens for enrollment today. Diane and her guests discuss the politics of the government shutdown and budget battles in Washington.

Guests

Jared Bernstein
senior fellow, Center on Budget and Policy Priorities, and former chief economist and economic policy adviser for Vice President Joe Biden.

David Wessel
economics editor, The Wall Street Journal; author of "Red Ink: Inside the High-Stakes Politics of the Federal Budget."

Transcript

10:06:53

MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Yesterday, the House and Senate failed to find consensus on a resolution that would temporarily fund the government. That means, starting today, the government partially shuts down, suspending an array of services and putting hundreds of thousands of employees on furlough.

10:07:16

MS. DIANE REHMHere to report on the latest on the shutdown and upcoming budget battles: Jared Bernstein of the Center on Budget and Policy Priorities, David Wessel of The Wall Street Journal, and Chris Edwards of the Cato Institute. I'll be interested in your reaction to this latest battle in Washington, what it means to you and for you. Give us a call, 800-433-8850. Send us your email to drshow@wamu.org. Follow us on Facebook or Twitter. Welcome, gentlemen. Thanks for being here.

10:07:58

MR. JARED BERNSTEINThank you.

10:08:00

MR. DAVID WESSELGood morning.

10:08:01

MR. CHRIS EDWARDSThanks, Diane.

10:08:02

REHMDavid Wessel, we've seen lots of last minute deals over the past three years, but not this time. How come?

10:08:13

WESSELThat's a good question. I think that the differences between the two parties -- or the three parties if you count the Republicans as having two parties these days -- were so broad, so wide that there was no way to bridge the gap. People seem to be determined to stick to their positions and to drive over the cliff, and so they did.

10:08:38

WESSELI think the other thing probably has something to do with personalities that different personalities at different times in history have managed to take these 11th hour things and find some miraculous solution. But none of the players in this one seem to have that particular skill.

10:08:53

REHMDo you really mean that the Republican Party is now two parties?

10:08:58

WESSELWell, I think there's a quite a bit of disagreement among the House Republicans about this. And I think that, yes, I think there is a -- it's unusual. Usually, we think of the Democrats of being at least 47 different factions. But at the moment, the Democrats seem united, and the Republicans seem divided between a Tea Party faction that feels very strongly, it is going to make its point, and it isn't interested in compromise. And another faction, I mean, John McCain is certainly one spokesman for that, that says, this is nuts, and we shouldn't be doing it.

10:09:30

REHMChris Edwards, it's not about spending. It's about Obamacare. Do you agree with the entire strategy?

10:09:41

EDWARDSI think, to follow up on what David said, I think, to an extent, the Democrats brought this on themselves because they passed the Obamacare law in 2010 in a very partisan way. It didn't get any votes in the House or Senate from Republicans at all. So that is a problem. Major social legislation, such as welfare reform in 1996, garnered sustained political support because it was passed in a bipartisan way similarly as tax reform in 1986.

10:10:10

EDWARDSThis is passed in a very partisan way. So the Republicans were never on board with this. So it's not surprising that they're going to continue battling this. And I think, depending on what polls show for Obamacare in coming months and years, Republicans will continue to battle against this. So even if the Republicans lose this round, I don't think this will be the end of it.

10:10:32

REHMOf course, they've lost not one but 42 rounds.

10:10:37

EDWARDSWell, that's true although I don't agree with David that there is, you know, that there's two parties here. I mean, in fact, in all these House votes, they've got almost unanimous support by the majority in the House. So, you know, while Obama says, yes, he was reelected, so therefore the Republicans ought to just give up. But, you know, the Republicans, you know, continue to hold the House. They were reelected as well, so I think they feel strongly. And the polls, especially in their districts, back them up on what they're doing, I think.

10:11:08

REHMSo how do you feel about Senators John McCain and Peter King coming out and saying, look, Obamacare is here to stay, let's not shut down the government over something that is now law?

10:11:25

EDWARDSWell, let's go back and do a comparison, say, to the Bush tax cut. The Bush tax cuts were passed with some bipartisan support, and yet the Democrats spent a decade battling against it and demonizing it, trying to repeal it -- or at least repeal parts of it. So I don't think the current battle is that much different than past political battles. If the parties don't agree -- and the current -- the two parties don't agree on this, they're going to keep battling.

10:11:52

REHMJared Bernstein, not much difference?

10:11:55

BERNSTEINWell, I strongly disagree with a lot of what you and listeners just heard. I think it is completely legitimate for Congress and the White House to have precisely the kinds of battles that Chris is talking about. And, in fact, if you think about the Bush tax cuts -- by the way, the second round of Bush tax cuts was passed on precisely the same nonpartisan strategy that the Affordable Care Act was.

10:12:20

BERNSTEINSo I don't think that analogy holds. But if you think back to the Bush tax cut battle -- and it was a very intense battle -- the Democrats never shut the government down over the Bush tax cuts. The Democrats never threatened to default on the debt. There is -- and the president said this yesterday, and he's right.

10:12:37

BERNSTEINI am ready to have any argument you want about Obamacare, but I'm not going to repeal it. It's the law of the land. It's not a bill anymore. It's now a law. The president won robustly a reelection. The law was defended in the Supreme Court. We have a political system that only works when members are willing to get together and have precisely the kind of battles that Chris is talking about and calling for. This is something different, and let's not confuse the two.

10:13:06

REHMDavid Wessel, is the budget process itself broken?

10:13:13

WESSELYes. I mean, it's hard...

10:13:15

REHMShort answer.

10:13:15

WESSELI don't think there's any disagreement about that. I mean, Congress had up a budget process in 1974, and it worked sputteringly (sic) off and on since that time. But it hasn't worked for the last four years. The Houses of Congress have not managed to pass budget resolutions and reconcile them to compromise their differences in order to provide any kind of a blueprint.

10:13:35

WESSELAnd that's one of the reasons why we're having so much trouble now. I think that reflects a polarization in the Congress and in the country as a whole, and so it's not only a process thing. I think it's a symptom of a bigger thing. But the process isn't working, and I haven't heard anybody defend it lately.

10:13:51

REHMSo what does that mean going forward if the process itself is not working? Where are we as a country that supposedly stands for lots of good things, Jared?

10:14:09

BERNSTEINWe are a country that is in trouble in that regard, and I think that that is evidenced -- I don't say that lightly. I think that is evidenced by the fact that the federal government has shut down today over its inability to compromise and to functionally deal with strong disagreements. I have no problem with the parties. And I think probably everybody hearing my voice has no problem with parties having disagreements on policy.

10:14:33

BERNSTEINDiane, I've been in here for years talking about precisely that. But we're in a new studio, so not in here -- but generally talking to you. But this is something different. And the level of dysfunctionality that we're seeing from this Congress, I think, ultimately can undermine important attributes about America.

10:14:51

REHMJared Bernstein, he's with the Center on Budget and Policy Priorities. Chris Edwards, he's at the Cato Institute. David Wessel is economics editor for The Wall Street Journal. David, who is affected by this shutdown, and who isn't, and how will the country continue to operate?

10:15:23

WESSELWell, I think the country will continue to operate. I think one of the reasons this happened was because a lot of people who do vital services are exempted. And I think also the backdrop here is earlier in the year, we had the across-the-board spending cuts of the sequester. And despite the president's warnings that the sky fall, they didn't.

10:15:44

WESSELIt was incredibly inconvenient and denied a lot of people who work for the federal government their paychecks and all that. But I don't think the broader public noticed it. So what we're told today is about 800,000 people are told, you can't work. And these are people who work at -- who admit visitors to the National Zoo although the people who feed the animals, as Jared pointed out to me when we walked in, are being fed.

10:16:07

WESSELThe panda cam is down. There's been a lot of confusion about the passport office. I'm told that the passport offices are open. Apparently, they have some different fee stream. The military is operating. The air traffic control system is operating. So the people who do the paperwork of the government are largely not working. But the people who provide vital services to protect life and property are.

10:16:30

REHMBut here's the irony, Chris: Obamacare begins today. People can still sign up for it despite the shutdown in the government. So have the Republicans who want to stop Obamacare succeeded or not?

10:16:52

EDWARDSWell, we don't know yet. I think that their strategy, even if the government opens again and they ultimately sign what's called a clean continuing resolution, they have raised the issue of -- they have reflected the unhappiness with a lot of the electorate about Obamacare. They've raised a lot of issues to the top of public discussion, such as the fact that Congress, the Congressional staff and members, you know, seem to get a special deal under Obamacare, and the fact that there's big privacy concerns with Obamacare.

10:17:24

EDWARDSThere's all these concerns with Obamacare that I think are going to continue to be discussed in the months and years ahead. Republicans at least have raised the profile of these issues. I would say to David's point that, I mean, the shutdown isn't totally unprecedented. We have had 17 of them actually since the late 1970s. They're not catastrophic.

10:17:44

EDWARDSAnd all the entitlement programs continue to operate. All the federal activities having to do with the safety of life and property continue to operate. I think in the long term we have to think about if places like the National Zoo are disrupted, we should think about moving them off the federal budget into, you know, a private nonprofit structure or giving the National Zoo back to the city of Washington, for example, or something like that, so they...

10:18:09

REHMWhat about the parks, the U.S. Park system?

10:18:12

EDWARDSA lot of -- there's 400 National Parks. A lot of those actually used to be State Parks, and they kicked them up to the federal government because they don't want to deal with the budget pressures. A lot of -- you know, Mt. Vernon is a private organization. You can move a lot of these parks into private self-funded institutions.

10:18:28

REHMChris Edwards, he's an economist editor of DownsizingGovernment.org at the Cato Institute. When we come back, it's time to hear your comments, how you are thinking about this government shutdown. Stay with us.

10:20:02

REHMAnd welcome back. As I'm sure you know by now, the federal government has been shut down because of the failure in Congress to pass a continuing resolution. The Republican members of Congress, most especially those members of the Tea Party focused on the president's Affordable Health Care Act, wanted that revised rather dramatically or indeed repealed. The Democratic Senate said, we will not budge. Who is going to get the blame for this, David?

10:20:47

WESSELWell, I think the conventional wisdom is that the Republicans will get more of the blame, that the -- there have been -- the president has succeeded in painting them as obstructionists and received wisdom from the 1994, '95 shutdown is that the Republicans in Congress got the blame. That may be the case. I think that I sense a generalized disgust in the public about Washington in general. And I'm not so sure that the president's going to be able to come out of this without some scars himself.

10:21:17

REHMJared.

10:21:19

BERNSTEINThat sounds about right to me, although I think the story that the president has started to tell with public speaking engagements in the last few weeks is one that does lay out the narrative, and, I think correctly, that he's tried to compromise along the way on budget issues. He's not going to negotiate on the debt ceiling or the repeal of Obamacare.

10:21:40

BERNSTEINBut just yesterday he said, you got ideas to make this health care plan work better? Tell them to me. I'll listen to them. We'll do that, again, in the spirit of negotiation, not threatening a shutdown. I'd like to make just a couple of points though that depart a little bit from David's view of the impact of the shutdown. I actually think it's going to be -- it's going to feel worse than that to more people.

10:22:02

BERNSTEINThe idea of closing the National Parks -- and we can have a privatization argument some other time -- the idea of closing the National Parks is actually something that a lot of people will notice, and not just the people who want to go to the parks, but the tourism industry and small businesses who actually have businesses right outside those parks that actually service a lot of those people, motels, things like that. I know people individually who have cancelled trips because they were planning to go to a park somewhere, go fishing, for a trip, thing like that.

10:22:34

REHMWhat about the (word?) poll you were mentioning?

10:22:36

BERNSTEINSo, yeah, there's a new poll out this morning that quite strongly suggests that people are starting to see this from a lens of Republican obstructionism is why we're in this mess. Now you can also -- with the shutdown. You can also find evidence in the poll that says, we blame everybody because we think the government is a mess. But when you get to the shutdown in particular, it looks like people are starting to recognize that it's gridlock coming from the House Republicans.

10:23:00

REHMChris Edwards.

10:23:01

EDWARDSYeah, I -- that doesn't surprise me that the polls show that, and the Republican strategy, I think, has been terrible. I think if they were -- I'm stunned that they waited until the very last weekend to decide what strategy they're going to take. It's been six months since the last budget battle. They should've figured their strategy early on and sold it to the public during the summer. That said however, even if they blame Republicans in the short run, I don't think that necessarily translates into election results in voting next year.

10:23:29

EDWARDSI think if you look back at the 1995 and '96 shutdown, even if Republicans are blamed in the short run, in the 1996 election they still retained the House. They lost, I think, just six seats and they actually gained two in the Senate and, you know, even though they had a weak presidential candidate. So I don't think they will -- when it comes to voting I think they're still going to -- Obamacare may still be very unpopular next year. And they may think the Republicans had a bad strategy, but that doesn't necessarily mean they're going to kick him out of office.

10:23:57

REHMHow do you respond to people who look back at the birth of Medicare and talk about how unpopular that was at the beginning and now has become part of our everyday lives?

10:24:14

EDWARDSWell, the popularity or not, that doesn't mean -- Medicare has giant problems of course, trillions of dollars of unfunded liabilities over the decades. So, I mean, there's a difference between good public policy and, you know, what is or not popular. I mean...

10:24:25

REHMSo you do not feel that Medicare is good public policy.

10:24:29

EDWARDSNo. And I don't think Obamacare is either.

10:24:32

BERNSTEINCould I speak to the political point that -- Chris may be right in terms of voting. I can't -- I don't know about that. But what I would like to say to anyone who can hear my voice right now, is that one of the problems we're having, one of the reasons we're in the mess we're in is because voters, the electorate, are sending too many people to Washington who basically want to shut it down.

10:24:54

BERNSTEINThey don't want to compromise. And they say, send me to Washington, and I'll essentially block the processes. I'll shut it down. And that -- it's -- you can't send people up here to do that and then be surprised when the system dysfunctions.

10:25:11

REHMAll right. I'm going to open the phones now. I want to hear what listeners have to say. Let's go first to Gary in Arlington, Texas. Hi, you're on the air.

10:25:26

GARYHello, Diane.

10:25:27

REHMHi there.

10:25:27

GARYI'm a card-carrying Republican for 45 years. And one of your folks commented earlier about the fact that there's really three political parties. There certainly is. Being a Texas Republican, I do not identify with Ted Cruz or the Tea Party. Those folks are actively working right now to get a primary candidate to run against Sen. John Cornyn. They really have found that by going to the primaries in Texas they can present someone like Sen. Ted Cruz. So please don't blame the Republican Party. Blame the Tea Party, and thank you.

10:26:11

REHMHow do you respond to that, Chris?

10:26:14

EDWARDSA lot of House Republicans were unhappy with Sen. Cruz's sort of fake filibuster last week. But I would argue that the real fault was with House Republican leadership. They had no strategy. They left a giant political void, so it's not surprising that a maverick like Ted Cruz is going to come in and try to fill it.

10:26:32

EDWARDSI mean, I think it's very ironic, for example, that Sen. McCain was very unhappy with Sen. Cruz's performance. But Sen. McCain built his whole career on being a maverick. And so here's a new younger maverick. And, you know, it's odd that Sen. McCain doesn't appreciate the fact that, you know, when you're a young and new senator, you want to generate support and lead a movement.

10:26:54

REHMDavid Wessel, you're rolling your eyes.

10:26:56

WESSELWell, I just -- I think that Sen. Cruz is building a campaign for president. And he was more interested in getting attraction for himself than in kind of seeing that the -- his positions prevailed at this juncture. I thought Sen. Corker made a big issue of this -- he's a Republican -- of course on the floor by -- because he was upset that Cruz wanted to delay the actual crescendo of this thing until it was -- it suited his primetime audience.

10:27:28

WESSELI think that, though, the caller makes a really good point, that one of the issues now is that members of Congress, probably more Republican than Democrat, are worried about being primaried from their flanks. And that is making it very difficult for them to move to the center to compromise to be seen as doing anything in cooperation with the Democrats.

10:27:48

WESSELAnd it's not only in the House. I mean, Mitch McConnell has a challenge in his primary in Kentucky. He's the minority leader of the Senate. And it seems to have influenced his role in this in a way that makes it harder for him to be the bridge builder and the lead consensus person.

10:28:01

REHMAnd what about John Boehner?

10:28:05

BERNSTEINJohn Boehner is also very relevant to Gary's comment, our caller, because if you listen to John Boehner's evolution -- maybe devolution is a better word -- over the last few weeks, he was essentially saying, I don't really want to shut the government down. I think we should have these battles in ways that involve negotiation. In fact, John Boehner -- back when I worked for the White House years ago, John Boehner was coming in and negotiating over tax deals. And again, it's a strong difference I have with Chris. Chris keeps talking about the battles that we have and the maverick that Ted Cruz is.

10:28:41

BERNSTEINWhat I'm trying to say, and I think where John Boehner really is, is that I'm happy to have these battles. I'm happy to entertain mavericks. There's a difference between arguing within the political system, implementing your maverickness (sic) within the political system and saying, if we don't get what we want we're going to default on the debt ceiling and shut down the government. That's why we are where we are here today. It's different, and it's much worse.

10:29:05

REHMChris.

10:29:06

EDWARDSThose battles are only going to get bigger and perhaps worse in coming years. The deficits aren't going away. The two parties are starkly divided. Not just that the Republicans have moved in more of a limited government direction. I think the Democrats have moved far to the left as well. But I think we can all agree that one of the basic problems is the budget process here.

10:29:27

EDWARDSI mean, why we have a big government shutdown this year is because they haven't passed any appropriations bills. I mean, they could've, you know, at least tried to get together and pass the appropriations bills that were not controversial and let the Obamacare, you know, battle as a separate issue. But -- so we do need to reform the...

10:29:43

BERNSTEINThat's explicitly what House Republicans said they wouldn't do. We will not pass a budget unless it repeals Obamacare.

10:29:53

EDWARDSRight. But there's no reason why -- I mean, they have passed defense...

10:29:56

BERNSTEINThere's no reason why they couldn't but they did.

10:29:58

EDWARDSOr they have separately passed a bill to fund uniformed military. So for example, that shows, you know, how they can get together on some of the appropriations. But if we reform the process we deal with a lot of these issues earlier in the year before we get to the very last minute on Oct. 1.

10:30:16

10:30:22

JULIEHi, Diane.

10:30:23

REHMHi.

10:30:24

JULIEYeah, I'm very frustrated. I -- you know, in listening to your guests and having -- you know, I've shut off from the news basically because you hear this rancor and this childlike finger-pointing of back in 1990-whatever, you know, the Republicans did this. Well, then the Democrats did that.

10:30:46

JULIEAnd what I would like to see happen is an intelligent conversation about the issues that are current today. I think the media plays a part in this and both the Democrats and Republicans are part of the problem. Let's work for the solution instead of pointing out how horrible each party is. And it just is very frustrating.

10:31:15

REHMJared.

10:31:16

BERNSTEINYeah, Julie, I totally agree with you. In fact, if you've heard frustration in my voice today, I share your sentiments. And to the extent that I am angry about this, it's not -- it's precisely because we're not having the very arguments that you're calling for.

10:31:33

BERNSTEINAs far as the media, if I can just make a pitch for "The Diane Rehm Show," it is the case that in this room pretty much five -- it may be more than five days a week now -- you do hear people debating the policy issues. So there are lots of people, and I'm one of them and so are Chris and David, who very much want to and like to debate the policy issues. But in this partisanship climate we can't.

10:31:54

WESSELRight, I agree. I think the media has lots of sins but I'm taking this one on us. This really is Congress doing it to themselves. They didn't need any help from the press or cable TV. I think the other issue is that it's -- and I suspect both Chris and Jared share my frustration -- it would be different if the argument was over, what should we do about the long term federal deficit, if we were trying to decide how big a government do we want to have, how should we apportion the taxes, what spending should be cut, what should be increased?

10:32:24

WESSELWhat makes this particular shutdown battle different than some of the ones in the past is the issues at hand aren't those issues that are actually in the budget. And that's, I think, part of our frustration.

10:32:33

REHMDavid Wessel, he is economics editor for the Wall Street Journal. He's the author of the book titled "Red Ink: Inside the High-Stakes Politics of the Federal Budget." And you're listening to "The Diane Rehm Show." So where are we going considering this government shutdown? Where are we going on the debt ceiling, David Wessel?

10:33:03

WESSELI'm shaking my head, Diane, because I really don't know. I think that it's hard to imagine that this shutdown will be a quick one for the reason I said before that I think that the people are kind of complacent about the effects it has and because there doesn't appear to be any behind-the-scenes talks to resolve it.

10:33:21

REHMAre you sure of that?

10:33:23

WESSELNo, I'm not sure of that. I mean, something could happen after -- maybe they get their -- they feel they've expressed their anger and in two or three days they'll come together. I do think the debt ceiling thing makes it even more complicated.

10:33:35

REHMSure.

10:33:35

WESSELThe Treasury basically runs out of money sometime between the middle and the end of October. And without an increase in the debt ceiling they're not going to be able to pay all the bills, the social security, Medicare, interest on the debt or whatever. That's something we haven't really been through before on this. And...

10:33:51

REHMEver.

10:33:52

WESSELWell, there've been little glitches in the past, but not of this magnitude. And, you know, we don't -- the president says he won't negotiate over it. The Republicans are saying they're going to attach Obamacare provisions to that. I don't think we actually know who's going to blink.

10:34:07

REHMChris, how long do you think this is going to last?

10:34:11

EDWARDSOh, maybe a week or so. I think -- let me give you an optimistic and a pessimistic view. The optimistic view is that after the 1995, '96 shutdown -- the '96 one lasted three weeks -- President Clinton and congressional Republicans went on to sign Balfour reform, a telecom reform, a balanced budget plan in '97. So that was sort of the low. Then the two parties got together and got a lot of stuff done. Now is different. The parties are further apart. I don't believe President Obama is as much of a conciliator anywhere near as much as President Clinton was.

10:34:43

EDWARDSWe've also got -- the economy back then was growing strongly, which helped balance the budget and reduce deficits. Now we've got -- everything David said is right but we've also got large disagreements on the basic appropriations levels. I mean, the senate is looking at a number of 90 billion higher than the House appropriations number. So it's not just the Obamacare disagreement. There's this giant disagreement in the discretionary spending as well.

10:35:08

REHMJared.

10:35:09

BERNSTEINI think the key question here is, does the shutdown make default on the national debt more likely or less likely? And nobody knows the answer to that. If you think that John Boehner, who actually holds more cards here than we may have stated so far in our discussion -- because the Senate is ready to pass a clean continuing budget patch -- a clean budget patch.

10:35:31

BERNSTEINAnd the House is, of course, where the logjam has occurred. John Boehner could say tomorrow -- he could say today, we're willing to accept and move a clean budget bill, but I'm going to have to do it with a bunch of votes from Democrats. Now, John Boehner is Republican Speaker, and he doesn't necessarily want to do that. In fact, it could mean his job.

10:35:51

BERNSTEINSo at some point he has to decide, have the radical base of the Republican party, that David was talking about earlier -- have I given them enough space and now I have to kind of rest control back? If you believe that's the case, then the debt ceiling will be raised. If you believe that this kind of gridlock is going to persist throughout the month, we could possibly -- it's unthinkable, but we could possible breach the debt ceiling and default on our debt.

10:36:17

REHMDavid, you look very distressed as I am watching you. Do you -- are you really pessimistic about how long this might last?

10:36:29

WESSELNo. I'm kind of with Jared. It could go on for a while, but there is a possibility that it won't be resolved. And I think he's right that a lot has to do with whether John Boehner decides to pass something, knowing a lot of Republicans will vote against it.

10:36:48

REHMChris.

10:36:48

EDWARDSOne thing I would throw into this conversation is that I think they're only talking about a continuing resolution that's going to last six weeks. So we could well be back in mid-November.

10:36:57

WESSELWe're going to try and (unintelligible)...

10:36:57

EDWARDSWe have the debt limit. Then we might have through the rest of this fiscal year numerous different CRs (unintelligible) battle...

10:37:03

WESSELAt one point the Republicans were talking about a continuing resolution that lasts to Dec. 15. And a senior administration official said to me, do these guys really want to ruin the holidays again?

10:37:15

REHMDavid Wessel of the Wall Street Journal. Short break here, and when we come back, more of your calls, your email. I look forward to speaking with you.

10:40:02

REHMAnd welcome back as we continue our discussion about the government shutdown. And from Twitter: "Why does the FAA get exempted from the shutdown?" Jared?

10:40:16

BERNSTEINWell, the technical answer is because, as David mentioned earlier, these essential services are kept in place in order to maintain safety. So that's why that is. But, I mean, I wonder how many other houses were like this this morning. At my house this morning, I made a nice dish of huevos rancheros for my kids to get them off to school.

10:40:35

BERNSTEINAnd we're sitting there looking at the paper, talking about this. My 14-year-old says, "Dad, why does everybody hate Obamacare?" So I thought that was an interesting question. And my wife says, relevant to this question, "Why do they exempt anything? Why exempt military pay? Why exempt FAA? Because if you start exempting things, you're in a situation where people won't really notice."

10:40:56

REHMFeel it.

10:40:56

BERNSTEINWon't feel it.

10:40:58

REHMYeah.

10:40:58

BERNSTEINSo there is a view out there that says the more you feel -- I mean, basically, if you shut down the FAA, you're shutting down air travel.

10:41:03

REHMOf course.

10:41:03

BERNSTEINSo at that point, I suspect a shutdown will last about 30 seconds. So I think she has a point.

10:41:08

REHMAll right. And, David, what's your response?

10:41:11

WESSELI think Jared's right. I've often felt…

10:41:14

BERNSTEINMy wife was right.

10:41:14

BERNSTEINYour wife was right, right. I mean, obviously, one doesn't want to advocate putting the country through hell just to prove a point. But the shutdowns happen because so many things are exempt. I often fantasized that if the president had really managed -- which I don't think he could do legally -- to focus the sequester on only the airport security guards, the TSA, and that delayed Congress members from getting to and from work, that the sequester would have ended sooner, too.

10:41:42

REHMYou know, one thing we haven't talked about, what does this shutdown do to our standing worldwide? Chris Edwards?

10:41:53

EDWARDSWell, as I was talking to Jared and David this morning a little bit about, is that there's some countries with much worse political and budget situations than us. Italy's going through great turmoil now. A lot of other countries, Japan and Korea, often have big, you know, ugly budget battles. So I would say United States is sort of in the middle in terms of the stability of its budget process. Some countries, like Britain, seem to have a much more stable budget process than us, but some countries, it really is more chaotic.

10:42:21

REHMOne begins to wonder whether we need a new budget process. David?

10:42:26

WESSELWell, I think this does hurt our standing. I mean, let's put this in a little perspective. We've been through a number of rather discouraging moments in our democracy. The whole Syria thing hardly bolstered America's standing abroad. There's a lot of questions about whether the system functions. I think that people around the world will wonder if, you know, can you keep your commitments to the world if you can't even manage your own budget process?

10:42:52

WESSELIf you're watching this on TV and you don't understand all the continuing resolutions, shutdown, debt ceiling stuff, it's not a very good advertisement for our democracy.

10:43:01

REHMJared?

10:43:01

BERNSTEINThe only thing that I would add is that I think the shutdown has the impacts that were just debated. If we breach the debt ceiling, if we default on our sovereign debt, then we're not just messing around with a budget process that affects America. Now we're talking about global financial markets. And I say that without any hesitation or hyperbole. That is absolutely the case. At that point, you will see global market reactions that I believe will be deeply negative.

10:43:30

REHMChris?

10:43:31

EDWARDSI think much more important for the United States is finances in the world economy, is getting our long-term entitlements and budget under control. I think having short-term battles, even as ugly as the current one is, we're probably going to have to do it in order to get deficits and debt down in the long run.

10:43:51

BERNSTEINBut do you think it's a good idea to breach the debt ceiling and service of that end?

10:43:54

EDWARDSNo.

10:43:56

BERNSTEINOK. Just checking.

10:43:56

REHMAll right. To Grand Rapids, Mich. Brian, you're on the air.

10:44:02

BRIANOh, good morning, Diane. And good morning, all.

10:44:04

REHMHello.

10:44:05

WESSELGood morning.

10:44:06

BRIANI feel like a hostage would feel in a situation like this where a group of people are holding the American economy hostage. We're looking at a bad situation getting worse by the day. And the Chamber of Commerce were so against this, I'm wondering if they might consider backing more Democratic prospects in the future.

10:44:32

BRIANMy question is, what about racism in all this? I just see that there's a group of people out there that would stop anything. You know, Obama's making strides in the Middle East, and he's shut down two wars. He's trying to get the economy back, make jobs for people, and these people are out to wreck the economy and hurt Americans' lives.

10:44:58

REHMWhat do you think, Jared Bernstein?

10:45:00

BERNSTEINFirst of all, I very much appreciate Brian bringing the economy into the discussion because it's almost like we've forgotten that we have an unemployment rate that is above 7 percent. Something like 35 percent of the unemployed have been stuck there for at least half a year. So we have ongoing economic challenges.

10:45:18

BERNSTEINThe economic recovery has been gaining a little bit of momentum, but it's been small. And we risk that when we start screwing around with the shutdown, and particularly the debt ceiling. On the economy, I wanted to say one point. These 800,000 workers that are furloughed today, they're furloughed -- these are government workers. They're furloughed without pay. They're furloughed without pay. They may be paid retroactively -- typically they are.

10:45:42

REHMThey may.

10:45:43

BERNSTEINBut that's the key, they may. You have 800,000 people out there who don't know where their paycheck is coming from. That's going to affect the macro economy. On the racism point, I can't so much speak to that. What I can say is that the antipathy towards this president is such that you get the feeling that anything he proposes, the opposition hates, knee-jerkily, without thinking about it.

10:46:04

REHMBut, David, many would argue that President George W. Bush faced the same kind of knee-jerk reaction.

10:46:15

WESSELWell, I think there was a lot of ridicule of President George W. Bush. And there was a lot of pillaring of Ronald Reagan. I've thought about this race issue. It's hard to believe it doesn't motivate some people, but I don't really think it's the major factor. I think the politics have gotten uglier and more poisonous and more personal even than they were in the Reagan and Bush and Clinton years. And let's remember, Clinton was not exactly celebrated by all the Republicans. They tried to impeach him. So it seems to have more bite and more venom now.

10:46:51

REHMChris?

10:46:53

EDWARDSWell, I would just follow up on something that Jared said, which is that, you know, if these budget battles are damaging the economy, the problem is that there's too much of the economy that's tethered to the federal government. To go to air traffic control, for example, it isn't affected this time around, but it was affected in the spring during the sequester.

10:47:10

EDWARDSThere was threats of shuts of control towers. Well, the solution is to set up a separate, privatized, self-funded system, like Britain and Canada have. And we need huge investment in our air traffic control system. Britain and Canada do that privately, by privately funded with airline fees. So I…

10:47:29

REHMAnd that really is the divide, isn't it, that Republicans, especially those of the Tea party, have a philosophical loathing of big government?

10:47:46

EDWARDSThat's right. I would put it in a more positive light, that Tea party folks and me, personally, us at Cato Institute, we believe in a more limited government. And we look around the world, and we look at sort of best practices for things like air traffic control. And we can have a better system that is separate from government that isn't subject to all these budget battles.

10:48:06

REHMBut you think you can achieve that by this kind of action on the part of the Congress?

10:48:13

EDWARDSNo. Ultimately, you know, the Republicans and believers in limited government are going to have to win elections. There's no substitute for winning elections. But, like I said about the Bush tax cut, it's not like the -- when the Republicans pass legislation, when they're in power, the Democrats try to repeal it and try to change it and reform it over time, as well. So I don't think the two parties are that different in that.

10:48:35

BERNSTEINAll I was going to say was this, I'd be happy to come back here with Chris and argue the costs and benefits of limited government, of privatizing the parks and the air traffic control. We could have a great argument about that. And members of Congress could have a great argument of that. But limited government is not shut down government.

10:48:53

BERNSTEINLimited government is not neglecting to pay the bills you've already incurred, which is what we're talking about. And I suspect Chris would agree with me, that what we have now is not limited government. It's a shut down dysfunctional government. And, if that's the case, we can't solve any of our problems.

10:49:09

REHMAll right. To John in Arlington, Va. Thanks for waiting. John?

10:49:17

JOHNSmall and medium businesses deal with regulators and my clients have basically told me to tread water because they don't want to do anything, you know, make important changes to their business while there's a lot of uncertainty. So this obviously hurts my wallet, but it hurts my clients because a lot of the people are just honest folks who want some rules to the road. You know, they are trying to get an FDA loan or they may need to discharge their debts in bankruptcy, but they can't.

10:49:50

JOHNAnd the worst part is that it seems like the people who should be advancing the public interest seem to think that, you know, that's not important. And, frankly, if one of my business partners said to me, you're running our business wrong, that philosophically I'm against this, and if you don't change I'm going to trash the computers or stop paying the electric bills, I mean, you know, that's just a complete breach of trust that wouldn't happen in the private sector.

10:50:16

REHMDavid Wessel?

10:50:18

WESSELWell, it's hard to argue with that. I think there is a big debate about how much uncertainty over government policy is or is not hurting the economy, which isn't doing as well as we'd like. But it's hard to argue that it's helping the economy. And so this just adds another layer of that on an economy which doesn't need any help in slowing down.

10:50:36

REHMAll right. And to Cindy in Matthews, N.C. Hi there. You're on the air.

10:50:44

CINDYHi, Diane. Yes. My name is Cindy. I'm a 55-year-old African-American woman who has voted ever since I was eligible to vote at 18. I would like to say that I think there are two major reasons why we are at the point that we're at now in this dysfunctional government, number one being, unlike the years of Abraham Lincoln, the Republican Party was more of a party of the people. They have become a dysfunctional fractured party, which no longer represents any democracy in America.

10:51:15

CINDYThey have become a party of big corporate America. And therefore, the middleman, the small guy no longer is a concern to the Republican Party. So that's number one. That's number one, why they do not want Obamacare because it really does help the disenfranchised and the average person. And it's kind of giving us a little -- it's leveraging the playing field to some extent, at least from a healthcare perspective.

10:51:43

CINDYNumber two, I think we need to be real in America about the hatred that the Republican Party feels for this African-American president. I have listened to other people's perspectives on how President Bush and how President Reagan also received, you know, some negative perspectives and were treated not totally from a correct perspective as president.

10:52:10

REHMAll right.

10:52:10

CINDYBut our President Obama has not been respected at any level of a president. It is so obvious, as an African-American woman, that the fact that he got there honestly, he's a smart African-American man, and he…

10:52:24

REHMAll right. Thanks for your call. Jared?

10:52:27

BERNSTEINTwo points. On the first point about corporate America, I think that Cindy has a point, but it's interesting. There are many in the business and corporate community who are very deeply against what's happening now in the Republican Party. It does not help them, as David Wessel just said, to have the government shut down or to even be flirting with the idea of not paying your debts or not paying our national or sovereign debts. So the business community usually has more sway over the Republican Party and can pull them back from these kinds of cliffs, and they haven't.

10:53:02

BERNSTEINOn her second point, that's the second time a caller has mentioned this racism issue. And I don't want to duck it. The caller was an African-American woman. I have a close friend who's an African-American man. They have brought this issue up to me more than once and feel quite strongly about it, in both cases. Now, these are anecdotes -- this is a couple of people -- but the fact that the people who feel this way are themselves African-Americans suggest that there probably is something there.

10:53:26

REHMJared Bernstein of the Center on Budget And Policy Priorities. And you're listening to "The Diane Rehm Show." All right. Here from Twitter: "Pardon my ignorance," it says, "but how does one branch of government hold the power to shut down operations? This seems like a checks and balance failure." Can you explain, David?

10:53:54

BERNSTEINGreat question.

10:53:55

WESSELWell, it is, in a sense. So the simple answer is that, in order for the government to function normally, both the House and the Senate have to pass a piece of legislation that the president signs. And any one of those players can stop it. In a way, it's because we've evolved a kind of peculiar hybrid of a presidential and a parliamentary system. In a parliamentary system, if the Prime Minister can't get stuff through, then the government falls, and they have an election.

10:54:21

WESSELWe seem to have evolved a kind of unworkable situation where everybody can stop something from happening, and nobody can get anything done. I just want to respond a moment to the woman from North Carolina about one thing she said about the Republicans. It is true, however, that the Republicans who are in Congress won elections.

10:54:39

WESSELPeople voted for them. It wasn't all a lot of big companies who put them there. In fact, the way we draw the districts, the number of the Republicans -- I think over 200 have more than 10 percentage point margin in their last race. So they do represent a set of people. And one of the difficulties we have here is that they get rewarded by their constituents from taking these positions.

10:54:59

REHMChris, tell me about John Boehner. Do you think he acted appropriately?

10:55:06

EDWARDSNo. I don't think he showed good leadership. I think the House leadership should have got together many months ago, decided on the strategy, then tried to sell it to the public and voters over the summer, and inform people what they were going to do. Rather than sort of springing it on everyone at the last minute.

10:55:21

EDWARDSSo I agree with David. I think one of the issues is the Republicans have felt very frustrated in recent years. President Obama, for example, has given all kinds of exceptions and unilateral changes to the Obamacare legislation and the House Republicans have felt that they've been left out of the process.

10:55:39

EDWARDSSo, for example, President Obama gave a one-year delay to the employer mandate, but one of the bills Republicans tried to pass yesterday was doing a similar one-year delay of the individual mandate. The Democrats immediately through that out the window. So I think Republicans felt very frustrated that they haven't been able to come to any kind of middle ground compromise.

10:56:00

REHMSo where are we going, Jared? Are going to be talking about this for weeks to come? Do you foresee that somehow these guys are going to start talking to each other?

10:56:14

BERNSTEINI'm pessimistic about that. I do believe, as my colleagues have said, that the shutdown could last a couple of weeks. That's actually long.

10:56:23

REHMWhoa.

10:56:23

BERNSTEINI think that the pain from that will be felt. But, remember, in a couple of weeks, we have to talk about the debt ceiling. And when you resolve the shutdown, that's by way of saying we then have appropriations bills for all of the agencies. But they're going to last six weeks, so we will be back here again. The partisan differences in Congress are too entrenched right now for this group to work things out in the way you suggested.

10:56:48

REHMDavid?

10:56:48

WESSELAnd so I think that's a good forecast. A couple things could happen to make that too pessimistic. One is we could discover that the financial markets wake up, and there's some big disruption. And that does have a way of focusing the minds of members of Congress. And the second is, if there really is a public disgust that -- members of Congress are very sensitive to public attitudes. And so if the pressure's on them to do something, that could make it happen sooner.

10:57:13

REHMDavid Wessel, Jared Bernstein, Chris Edwards, thank you for being here, if not for any good news this morning.

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